June 19, 2017

With all the big oil and gas news over the last few weeks, it might be hard to keep track of the different rules, agencies, court rulings and studies—and what they mean for New Mexico.

Last week, U.S. District Judge James “Jeb” Boasberg ruled that the federal government’s environmental review of the Dakota Access Pipeline was insufficient. The ruling came after the Standing Rock and Cheyenne River tribes sued the federal government, arguing the U.S. Army Corps of Engineers hadn’t complied with the National Environmental Policy Act when it greenlighted plans to build the oil pipeline under Lake Oahe, a reservoir on the Missouri River.

In his opinion, Boasberg wrote that the court agrees that the federal government didn’t adequately consider how an oil spill would affect fishing rights, hunting rights or environmental justice issues. It’s not clear, however, if the company must cease operations while the Corps of Engineers reconsiders certain sections of its environmental analysis.

Chaco plans

In New Mexico, indigenous and environmental groups have pointed to what they say are inadequate studies of oil and gas development in northwestern New Mexico’s San Juan Basin. In early June, the U.S. Bureau of Land Management (BLM) and the Bureau of Indian Affairs (BIA) released a new report, detailing plans to address concerns about increased drilling near Chaco Canyon on the eastern Navajo Nation.

Drilling opponents have said the current plan, written in 2003, is out of date and does not consider the cumulative impacts that hundreds of new shale oil wells will have on the important cultural sites or the landscape and its communities. The area had previously been known for a high level of natural gas production. But after a downturn in prices in 2015, that activity slowed down, and companies started drilling oil wells instead.

“It’s not the most earth-shattering document and it’s not a decision-making document, but we were struck by how the BLM acknowledged the diverse concerns in the Chaco region,” said Jeremy Nichols climate and energy program director with WildEarth Guardians. The new document accommodates not just industry’s needs in procuring access to new well sites, he said, but also environmental and cultural concerns.

“We’re not naive that the BLM often fails in its planning efforts, but we don’t want to pre-judge this, and we want to send the message to BLM that moving forward is the most important thing you can do, and if you don’t follow through, or if the process stalls, it will be akin to a broken promise” he said.

Laura Paskus/NMPR

Waste ponds near Chaco Canyon in northwestern New Mexico.

The BLM had enacted a leasing moratorium in a 10-mile radius around Chaco Culture National Historic Park. But environmental and community groups, tribes and archaeologists have continued to point out that there are Navajo communities, as well as archaeological and sacred sites, even outside the boundaries of the park.

The New Mexico Legislature also passed a memorial this year encouraging the BLM and BIA to halt new leases and drilling permits until there has been sufficient tribal consultation and a new resource management plan has been completed.

Mike Eisenfeld with the San Juan Citizens Alliance is glad the BIA is finally participating in the process, but noted that drilling is still happening close to communities and within the Greater Chacoan landscape—and federal agencies are still approving new applications for permits to drill.

“The agency can’t even put together the fortitude to protect one of the most important cultural areas in the United States, and maybe even the world,” he said. He also questioned what it means to consult with sovereign tribal governments under federal law.

“A huge question in my mind is, ‘What does consultation mean? What does compliance with the National Historic Preservation Act mean?’” he asked.

Under laws like the National Historic Preservation Act and the National Environmental Policy Act, federal agencies are required to consult with tribes when it comes to projects such as these.

The Navajo Nation, the Hopi Tribe and the All Pueblos Council have all asked for a moratorium on drilling in the Greater Chacoan Landscape.

Last week, the federal government made two significant announcements about rules that would have reduced methane pollution from the oil and gas industry.

Emissions of methane, or natural gas, contribute to the warming of the planet. Methane is a shorter-lived but more potent greenhouse gas than carbon dioxide.

In early June, U.S. Environmental Protection Agency (EPA) Administrator Scott Pruitt announced that his agency won’t implement an Obama-era rule designed to cut methane emissions from oil and gas operations. Initially, he announced a three month stay of the rule.

Environmental groups filed a lawsuit, asking the court for a judicial stay of the EPA’s decision after Pruitt announced the three-month stay.

USEPA

EPA Administrator Scott Pruitt

The cornerstone of that rule, according to the groups, is its requirement for companies to monitor their wells and compressor sites and to report and fix the leaks they detect.

According to the court filing, equipment leaks from malfunctioning or improperly installed components are among the largest sources of methane and other pollutants from the oil and gas industry.

Citing the agency’s own data on the rule, which was finalized last June, the document states: “EPA found that leak detection and repair will deliver up to 45 percent of the 2016 Rule’s total projected reductions in smog- and soot-forming volatile organic compounds, more than half of its methane reductions, and approximately 90 percent of its reductions in hazardous air pollutants such as cancer-causing benzene and formaldehyde.”

Operators were supposed to have completed their first round of monitoring by June 3, 2017, and would have had 30 days to fix those leaks.

Last week, Pruitt issued another stay on the rule, this time for two years.

President Trump’s EPA administrator is a longtime ally of the oil and gas industry. As Oklahoma’s attorney general, Pruitt sent a letter to EPA in 2011 complaining that the agency was overestimating air pollution emissions from oil and gas operations in the state. Pruitt’s letter, as reported by the New York Times in 2014, was written by lawyers for Devon Energy Corporation, an oil and gas company. Pruitt’s staff copied the letter on state letterhead, then sent it to the EPA with his signature.

BLM suspends methane rule Congress saved

At the same time, U.S. Department of the Interior Secretary Ryan Zinke, whose department oversees BLM, has suspended a separate rule that would have cut methane waste from oil and gas wells, stations and pipelines on federal and tribal lands.

The BLM issued its methane-cutting rule in November 2016 after years of meetings and studies. The rule was designed to limit routine flaring from oil wells, require operators to modernize their leak-detection equipment and fix leaks and, except for in certain cases, no longer allow operators to vent methane directly into the atmosphere.

In 2016, Assistant Secretary for Land and Minerals Management Janice Schneider noted that 375 billion cubic feet of natural gas—or enough to power more than 5 million households for a year—were lost to venting and flaring between 2009 and 2014.

Industry is not operating efficiently, she said at that time, which affects local pollution and climate change—and leads to lost royalties for states, tribes and the federal government.“The monetary and social costs of releasing natural gas into the atmosphere are clear, significant, and dangerous,” she said to reporters during the announcement of the new rule.

But industry opposed the rule. Immediately, the Western Energy Alliance (WEA), the Independent Petroleum Association of America and the states of Wyoming, Montana, North Dakota and Texas sued.

In March, President Donald Trump directed Zinke to review the rule.

Then in May, U.S. Sen. Majority Leader Mitch McConnell, a Kentucky Republican, tried to overturn the rule under the Congressional Review Act.

Congress preserved the rule, however. The surprise defeat of McConnell’s effort was on a 49-51 vote, with Republican Senators Susan Collins of Maine, John McCain of Arizona and Lindsey Graham of South Carolina voting with Democrats to keep the rule.

According to the BLM’s suspension, Zinke had received requests from the two industry trade groups asking him to suspend the rule or postpone the date for companies to comply “in light of the regulatory uncertainty” created by the pending litigation and the ongoing review of the rule.

USDOI

Interior Secretary Ryan Zinke

The Independent Petroleum Association of America and WEA said operators faced significant expenses to comply with the rule. Specifically, WEA said it would require operators to “begin purchasing and installing tens of thousands of replacement parts in the near future.”

WEA President Kathleen Sgamma wrote in an email to NM Political Report that the BLM rule would have caused more than 400 job losses in New Mexico and $10.3 million in lost revenue.

The rule’s delay, she said, will help the state. “Producers in New Mexico and across the nation will not have to comply with rules that are likely to be substantially different than their original forms,” she wrote. “The BLM rule delay means that many existing low-producing wells in New Mexico on federal and tribal lands will not need to be shut down because the costs of compliance exceeded the economic production from them.”

According to the BLM’s suspension, the methane waste prevention rule was properly promulgated. In other words, the Obama-era agency followed the correct procedures for creating and issuing a rule, which require economic and environmental studies as well as stakeholder and public input.

However, agency leadership believe that industry’s questions about the validity of certain provisions of the rule merit suspending it entirely.

NM’s anomalous methane problem lingers

These rules and reports all comes amid the backdrop of New Mexico’s biggest methane problem—which isn’t going anywhere.

In 2014, scientists published a paper on methane levels across the globe. Satellite images showed that the largest methane anomaly in the United States is over northwestern New Mexico. The methane hotspot is the size of Delaware.

NASA/JPL-Caltech/University of Michigan

The Four Corners area (red) is the major U.S. hot spot for methane emissions in this map showing how much emissions varied from average background concentrations from 2003-2009 (dark colors are lower than average; lighter colors are higher).

At the time, they couldn’t say exactly where all the methane was coming from, though they estimated some was from the tens of thousands of natural gas and oil wells, coal mines and other sources like natural seeps and wastewater treatment plants.

The scientists kept coming to New Mexico. They drove the back roads of northwestern New Mexico, capturing methane samples and determining their signature or fingerprint, and flew through the plume, sampling emissions.

Last year, they released the results of that research: Most of the methane was related to natural gas wells and coal mining. In fact, they identified 250 emitters of methane and found that 10 percent of those 250 were responsible for about half the methane emissions in the San Juan Basin.

Now, there’s a new study showing that the methane hotspot is not dissipating, despite the downturn in natural gas production in the San Juan Basin.

Natural gas drilling dominated the basin for decades until prices plummeted a few years ago. After that, some companies began using new technologies to drill for shale oil.

One of those companies is WPX Energy, whose recently retired San Juan Vice President, Ken McQueen, was nominated by Gov. Susana Martinez as Secretary of New Mexico’s Energy, Minerals and Natural Resources Department.

Discussion of the hot spot came up during McQueen’s confirmation hearing earlier this year.

During that hearing, McQueen indicated that the methane hotspot is due largely to natural sources.

Secretary Ken McQueen

At the time of McQueen’s appointment, WPX had the rights to lease about 100,000 acres of federal, state and Navajo allottee lands in the San Juan Basin for oil and gas production and had drilled more than 100 shale oil wells, many of which are within the area drilling opponents and tribes have asked the federal government to protect.

The latest study should put to rest assertions that natural seepage is causing the Four Corners methane hotspot.

By continuing to drill down to figure out exactly where the methane is coming from, scientists have now revealed that that natural emissions are not the main cause behind the hotspot.

Natural seepage of methane from geological sources, they found, are a “small fraction of the basin total…and cannot explain basinwide consistent emissions from 2003 to 2015.”

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